Why Net 1 UEPS Shares Jumped

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What: Shares of Net 1 UEPS (Nasdaq: UEPS) jumped today by as much as 15% after a favorable court ruling.

So what: In January, the company was awarded a lucrative contract by the South African Social Security Agency, or SASSA, to provide payment services for government social grants for five years. A month later, the contract was disputed by two local companies that lost during the bidding process, AllPay and Empilweni.

Now what: AllPay and Empilweni had said the award "threatens to completely destroy" its business. Net 1's announcement today was that the North Gauteng High Court ruled that the SASSA contract was valid and won't be set aside. The contract will involve enrolling millions of grant recipients and issuing smart cards with biometric tools.

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In actuality, the tender process was ruled illegal and invalid, but the contract won't be set aside for reasons of practicality - the judge thought it would disrupt the distribution of welfare benefits too much to force a changeover.

A little concerned about Net 1's representation, though the end result is the same - at least until AllPay's lawyers decide whether to pursue the issue further.